Shale gas production outpacing some U.S. regional demand

A federal report finds production from the Appalachian shale basin is supporting of liquefied natural gas exports.

Shale gas production from Appalachian states is outpacing demand and is robust enough to support exports, a federal report found. File photo by Gary C. Caskey/UPI. | License Photo

Jan. 26 (UPI) -- Gas production from three Appalachian states beats domestic demand and displaces regional supplies to the point of supporting exports, a U.S report stated.

The U.S. Energy Information Administration reported in a daily brief on Friday that production from the Appalachian shale basin increased from 1.4 billion cubic feet per year to nearly 24 billion cubic feet per in the span of a decade. Accounting for about 2 percent of total U.S. gas production in 2008, the basin now accounts for 27 percent, based on data through October.

Seven years ago, production was lower than demand but is now displacing reserves in other regions, supporting exports.

"Overall, Appalachian production has been displacing Gulf Coast supply, freeing additional U.S. production for export by pipelines and as liquefied natural gas," the report read.

A terminal planned in Maryland, Dominion Energy's Cove Point project, is on pace to start processing about a quarter billion feet per day of LNG per day for exports early this year and it's connected directly to the Appalachian shale.

The United States has pushed more shale gas into the open market in the form of LNG, hoping to eat into the Russian market share in Europe.

Earlier this year, commodity pricing group S&P Global Platts said gas prices in Europe were too low to support U.S. LNG imports and globally, a separate report from Fitch Ratings said securing long-term contracts for any of the major LNG players will be challenging as the field gets more crowded.

Looking for options because it has few resources of its own, European leaders have said LNG sourced from shale basins in the United States could be a source of diversity. In December, however, Russian Foreign Minister Sergei Lavrov said European leaders in Brussels were getting duped into paying "overpriced American liquefied natural gas."